History Does Not Repeat; But Might it Rhyme? LEO Second Coming Might Hinge on Mobile Operator Response

In the telecommunications business, sometimes the attacker becomes the defender, while former defenders become the attackers.

That challenge now is building, on new low earth orbit satellite constellations prepare for launches as soon as 2017.

Precisely which existing segments of the business are affected, and how, remains to be seen.

At least one business plan aims to provide Internet access directly to end users, perhaps globally. That will provide new competition for mobile service providers and others who provide Internet access on a retail basis to consumers and businesses.

But there also are other business models based either on wholesale backhaul, which might cast mobile operators in the role of customers.

Retail Internet access might not be the only business segment to be challenged if the LEO constellations are successful.

Another coming model will challenge at least some segments of the undersea capacity business. As crazy as it might sound, LEOsat believes it can relay traffic, satellite to satellite, with latency lower than undersea backhaul on fiber networks.

Some will remember an earlier generation of LEO proposals, none of which survived, and which have some observers worrying about whether a wave of overinvestment is about to hit the business.

Ironically, in that first wave of LEO innovation, it was not foreseen that mobile service providers would grow so fast that the business problem LEO constellations wanted to solve would no longer exist.

This time around, it is the LEO constellations which ironically could threaten mobile service providers who have been expected to be the major suppliers of Internet access to billions of people in developing markets.

But much depends on which business models prove most enduring. The wholesale providers might emerge as partners and enablers for ISPs, for example.

O3b, already in operation, already is supplying 2 Gbps of backhaul for mobile operators, according to David Burr, O3b VP.

LEOsat, for example, proposes to launch a new constellation of low earth orbit satellites to provide backhaul for a number of customer segments, ranging from maritime communications to enterprise private links for high speed trading.

The new wrinkle is that LEOsat proposes to do so entirely using its space segment, with latency lower than undersea optical fiber. That is something Elon Musk at SpaceX also has said could be a use for the LEO constellation it proposes to launch, as well.

But some, including OneWeb, plan to sell Internet access directly to end users. “Our value proposition is capacity, low investment cost and coverage of  every inch of the globe,” sys Dave Bettinger, OneWeb CTO. “Our prime mission is residential connectivity,” but O3b also sees opportunities in the maritime, aeronautical and mobility segments, also.

O3b expects to be fully operational in 2019.  

So the issue is what mobile operators will do. One might expect they will begin to move faster with their own plans to bring Internet access to hundreds of millions of potential users, not waiting for LEO constellations to serve them first.

And that, in turn, could pose grave dangers for LEO providers. Mobile operators destroyed LEO business plans before. Will they do so, again?